The company released its 2024 three-quarter report. The profit for the first three quarters decreased by 155.62% year on year, with a significant month-on-month loss reduction in the third quarter; the company's component shipments increased steadily, and the BC technology line was firm; and the purchase rating was maintained.

Key points to support ratings

Results for the first three quarters of 2024 fell 155.62% year on year: the company released the 2024 three-quarter report. In the first three quarters, the company achieved operating income of 58.593 billion yuan, a year-on-year decrease of 37.73%; realized net profit to mother of -6.505 billion yuan; a year-on-year decrease of 155.62%, achieving deduction of non-net profit of -6.488 billion yuan, a year-on-year decrease of 156.35%. According to the performance calculation, 2024Q3 achieved net profit to mother - -1.261 billion yuan, a year-on-year decrease of 150.14%, and a significant month-on-month loss reduction.

Silicon wafer shipments continued to grow, and component shipments increased steadily: According to the company's announcement, in the first three quarters of 2024, the company achieved 82.80 GW of silicon wafer shipments, of which 35.03 GW was external sales, and 2024Q3 achieved 38.37 GW of silicon wafer shipments. In terms of components, in the first three quarters of 2024, the company achieved component shipments of 51.23 GW (including BC module sales volume of 13.77 GW), an increase of 17.70% over the previous year.

The industry cost guide price is expected to help stabilize the company's profits: the China Photovoltaic Industry Association previously issued a document calling for industry compliance and competition, proposing a minimum cost price of 0.68 yuan/W including tax (excluding shipping and miscellaneous charges) for modules, and pointing out that the bid price below the cost price is suspected of being illegal. We believe that the introduction of the lowest cost price will help promote the healthy development of the industry, as well as a steady recovery in profits for component companies, including companies.

Firm BC technology layout: Relying on deep technology accumulation and advanced manufacturing advantages, the company has achieved a major breakthrough in HPBC 2.0 technology. The battery efficiency has reached 26.6%, the component conversion efficiency has increased to 24.43%, and the double-sided ratio has exceeded 70%. In terms of production capacity, the company aims to have 70 GW of BC battery production capacity by the end of 2025, of which HPBC 2.0 production capacity is about 50 GW. By the end of 2026, all domestic battery bases plan to migrate to BC products. The company will reduce BC costs by introducing a base metal program.

valuations

Based on current PV module/silicon wafer prices, future industry chain price forecasts, and the company's current production capacity and production capacity plan, we adjusted the company's 2024-2026 earnings forecast to -0.92/0.75/0.93 yuan (the original 2024-2026 forecast was 0.54/0.83/1.08 yuan), corresponding price-earnings ratio of 25.5/20.7 times for 2025-2026; maintaining the purchase rating.

The main risks faced by ratings

International trade barriers risk; industry demand falling short of expectations; price competition exceeding expectations; PV policy risk; cost reduction falling short of expectations; technical cost performance falling short of expectations.